Virginia |
001-16769 |
11-6040273 |
||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
675 Avenue of the Americas, 6 , New York, New Yorkth Floor |
10010 |
|
(Address of principal executive offices) |
(Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
Common Stock, no par value | WW | The Nasdaq Stock Market LLC |
Item 8.01. |
Other Events |
• |
Part I, “Item 1. Business” – solely to reflect changes under the caption “Business Organization” |
• |
Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” – solely to reflect changes in “Overview,” “Material Trends,” and “Segment Results” |
• |
Part II, “Item 8. Financial Statements and Supplementary Data” and Part IV, “Items 15(a) (1) & (2) Exhibits and Financial Statement Schedules”– solely to reflect changes in the “Notes to Consolidated Financial Statements,” specifically “Note 5 – Revenue,” “Note 7 – Franchise Rights Acquired, Goodwill and Other Intangible Assets,” and “Note 17 – Segment and Geographic Data” |
Item 9.01. |
Financial Statements and Exhibits. |
Exhibit |
Description |
|
Exhibit 23.1 |
||
Exhibit 99.1 |
||
Exhibit 101.INS |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
Exhibit 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
Exhibit 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
Exhibit 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
Exhibit 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
Exhibit 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
Exhibit 104 |
The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
WW INTERNATIONAL, INC. |
||||
DATED: August 2, 2023 |
By: |
/s/ Heather Stark |
||
Name: |
Heather Stark |
|||
Title: |
Chief Financial Officer |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-256264, 333-238154, 333-219779, 333-217835, 333-165637, 333-156185, 333-195800, 333-208067, and 333-264723) of WW International, Inc. of our report dated March 6, 2023, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the change in reportable segments discussed in Note 17, as to which the date is August 2, 2023, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 8-K.
/s/ PricewaterhouseCoopers LLP
New York, New York
August 2, 2023
• | “fiscal 2009” refers to our fiscal year ended January 2, 2010; |
• | “fiscal 2014” refers to our fiscal year ended January 3, 2015 (included a 53 rd week); |
• | “fiscal 2015” refers to our fiscal year ended January 2, 2016; |
• | “fiscal 2017” refers to our fiscal year ended December 30, 2017; |
• | “fiscal 2018” refers to our fiscal year ended December 29, 2018; |
• | “fiscal 2019” refers to our fiscal year ended December 28, 2019; |
• | “fiscal 2020” refers to our fiscal year ended January 2, 2021 (included a 53 rd week); |
• | “fiscal 2021” refers to our fiscal year ended January 1, 2022; |
• | “fiscal 2022” refers to our fiscal year ended December 31, 2022; |
• | “fiscal 2023” refers to our fiscal year ended December 30, 2023; |
• | “fiscal 2024” refers to our fiscal year ended December 28, 2024; |
• | “fiscal 2025” refers to our fiscal year ended January 3, 2026 (includes a 53 rd week); |
• | “fiscal 2026” refers to our fiscal year ended January 2, 2027; and |
• | “fiscal 2027” refers to our fiscal year ended January 1, 2028. |
• | Subscription Revenues. |
• | Consumer product sales, licensing, franchise royalties and other e-commerce platforms, at our studios, and through our trusted partners. We license our trademarks and other intellectual property in certain categories of food, beverages and other relevant consumer products and services. We also co-brand or endorse with carefully selected branded consumer products and services. In addition, we generate revenues from publishing and franchise royalties. |
Fiscal 2022 |
Fiscal 2021 |
|||||||
Subscription Revenues |
$ | 919.1 | $ | 1,063.0 | ||||
Consumer product sales, licensing, franchise royalties and other |
121.8 | 149.4 | ||||||
Total |
$ | 1,040.9 | $ | 1,212.5 | ||||
• | Subscription Revenues. |
• | Consumer product sales, licensing, franchise royalties and other. e-commerce product sales. |
(in millions except percentages) |
Fiscal 2022 |
Fiscal 2021 |
||||||
Gross Profit |
$ | 622.4 | $ | 726.4 | ||||
Gross Margin |
59.8 |
% |
59.9 |
% |
||||
Adjustments to Reported Amounts (1)
|
||||||||
2023 plan restructuring charges |
1.8 | — | ||||||
2022 plan restructuring charges |
6.5 | — | ||||||
2021 plan restructuring charges |
(0.6 | ) | 16.7 | |||||
2020 plan restructuring charges |
(0.7 | ) | (1.3 | ) | ||||
Gross Profit, as adjusted (1)
|
$ | 629.4 | $ | 741.8 | ||||
Gross Margin impact from above adjustments (1)
|
(0.7 |
%) |
(1.3 |
%) |
||||
Gross Margin, as adjusted (1)
|
60.5 |
% |
61.2 |
% |
(1) | The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of operations for fiscal 2022 to exclude the net impact of the $1.8 million ($1.3 million after tax) of 2023 plan restructuring charges, the $6.5 million ($4.9 million after tax) of 2022 plan restructuring charges, the reversal of $0.6 million ($0.4 million after tax) of 2021 plan restructuring charges and the reversal of $0.7 million ($0.5 million after tax) of 2020 plan restructuring charges, and for fiscal 2021 to exclude the net impact of the $16.7 million ($12.5 million after tax) of 2021 plan restructuring charges and the reversal of $1.3 million ($1.0 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” below for an explanation of our use of non-GAAP financial measures. |
(in millions except percentages) |
Fiscal 2022 |
Fiscal 2021 |
||||||
Operating (Loss) Income |
$ | (283.0 | ) | $ | 196.3 | |||
Operating (Loss) Income Margin |
(27.2 |
%) |
16.2 |
% |
||||
Adjustments to Reported Amounts (1)
|
||||||||
Franchise rights acquired and goodwill impairments |
396.7 | — | ||||||
2023 plan restructuring charges |
13.6 | — | ||||||
2022 plan restructuring charges |
27.2 | — | ||||||
2021 plan restructuring charges |
(0.3 | ) | 21.5 | |||||
2020 plan restructuring charges |
(0.7 | ) | (1.6 | ) | ||||
Operating Income, as adjusted (1)
|
$ | 153.5 | $ | 216.2 | ||||
Operating Income Margin impact from above adjustments (1)
|
(41.9 |
%) |
(1.6 |
%) |
||||
Operating Income Margin, as adjusted (1)
|
14.7 |
% |
17.8 |
% |
(1) | The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of operations for fiscal 2022 to exclude the impact of the $396.7 million ($301.3 million after tax) of franchise rights acquired and goodwill impairments and the net impact of the $13.6 million ($10.2 million after tax) of 2023 plan restructuring charges, the $27.2 million ($20.4 million after tax) of 2022 plan restructuring charges, the reversal of $0.3 million ($0.3 million after tax) of 2021 plan restructuring charges and the reversal of $0.7 million ($0.5 million after tax) of 2020 plan restructuring charges, and for fiscal 2021 to exclude the net impact of the $21.5 million ($16.1 million after tax) of 2021 plan restructuring charges and the reversal of $1.6 million ($1.2 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” below for an explanation of our use of non-GAAP financial measures. |
• | Revenues—Our “Subscription Revenues” consist of “Digital Subscription Revenues” and “Workshops + Digital Fees”. “Digital Subscription Revenues” consist of the fees associated with subscriptions for our Digital offerings, including Personal Coaching + Digital and Digital 360 (as applicable). “Workshops + Digital Fees” consist of the fees associated with our subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops. In addition, “product sales and other” consists of sales of consumer products via e-commerce, in studios and through our trusted partners, revenues from licensing and publishing, other revenues, and, in the case of the consolidated financial results and the North America reportable segment, franchise fees with respect to commitment plans and royalties. |
• | Paid Weeks—The “Paid Weeks” metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) “Digital Paid Weeks” is the total paid subscription weeks for our digital subscription products, including Personal Coaching + Digital and Digital 360 (as applicable); (ii) “Workshops + Digital Paid Weeks” is the sum of total paid commitment plan weeks which include workshops and digital offerings and total “pay-as-you-go” |
• | Incoming Subscribers—“Subscribers” refer to Digital subscribers and Workshops + Digital subscribers who participate in recurring bill programs in Company-owned operations. The “Incoming Subscribers” metric reports WW subscribers in Company-owned operations at a given period start as follows: (i) “Incoming Digital Subscribers” is the total number of Digital, including Personal Coaching + Digital and Digital 360 (as applicable), subscribers; (ii) “Incoming Workshops + Digital Subscribers” is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “Incoming Subscribers” is the sum of Incoming Digital Subscribers and Incoming Workshops + Digital Subscribers. Recruitment and retention are key drivers for this metric. |
• | End of Period Subscribers—The “End of Period Subscribers” metric reports WW subscribers in Company-owned operations at a given period end as follows: (i) “End of Period Digital Subscribers” is the total number of Digital, including Personal Coaching + Digital and Digital 360 (as applicable), subscribers; (ii) “End of Period Workshops + Digital Subscribers” is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “End of Period Subscribers” is the sum of End of Period Digital Subscribers and End of Period Workshops + Digital Subscribers. Recruitment and retention are key drivers for this metric. |
• | Gross profit and operating expenses as a percentage of revenue. |
• | reduced consumer interest in commercial weight loss and diet programs; |
• | the development of more effective or more favorably perceived weight management methods or technologies, including by the pharmaceutical, genetics and biotechnology industries; |
• | increased competition from weight loss and wellness apps; |
• | a failure to develop and market new, innovative services and products, to enhance our existing services and products, or to successfully expand into new channels of distribution or respond to consumer trends or sentiment, including consumer focus on integrated lifestyle and fitness approaches; |
• | a failure to successfully implement new strategic initiatives; |
• | a decrease in the effectiveness of our marketing, advertising, and social media programs or an increase in the effectiveness of our competitors’ similar programs; |
• | an impairment of our brands and other intellectual property; |
• | a failure of our technology or systems to perform as designed; |
• | any event or condition, including health epidemics and natural disasters, that may discourage or impede people from gathering with others or accessing resources; and |
• | a downturn in general economic conditions or consumer confidence. |
(In millions, except per share amounts) |
||||||||||||||||||||
Fiscal 2022 |
Fiscal 2021 |
Increase/ (Decrease) |
% Change |
% Change Constant Currency |
||||||||||||||||
Revenues, net |
$ | 1,040.9 | $ | 1,212.5 | $ | (171.6 | ) | (14.2 | %) | (11.0 | %) | |||||||||
Cost of revenues |
418.5 | 486.1 | (67.7 | ) | (13.9 | %) | (11.6 | %) | ||||||||||||
Gross profit |
622.4 | 726.4 | (104.0 | ) | (14.3 | %) | (10.5 | %) | ||||||||||||
Gross Margin % |
59.8 |
% |
59.9 |
% |
||||||||||||||||
Marketing expenses |
244.8 | 261.5 | (16.7 | ) | (6.4 | %) | (3.4 | %) | ||||||||||||
Selling, general & administrative expenses |
263.8 | 268.6 | (4.8 | ) | (1.8 | %) | 0.2 | % | ||||||||||||
Franchise rights acquired and goodwill impairments |
396.7 | — | 396.7 | 100.0 | % | 100.0 | % | |||||||||||||
Operating (loss) income |
(283.0 | ) | 196.3 | (479.2 | ) | (100.0 | %)* | (100.0 | %)* | |||||||||||
Operating (Loss) Income Margin % |
(27.2 |
%) |
16.2 |
% |
||||||||||||||||
Interest expense |
81.1 | 87.9 | (6.8 | ) | (7.7 | %) | (7.7 | %) | ||||||||||||
Other expense, net |
1.7 | 1.4 | 0.3 | 24.4 | % | 24.4 | % | |||||||||||||
Early extinguishment of debt |
— | 30.4 | (30.4 | ) | (100.0 | %) | (100.0 | %) | ||||||||||||
(Loss) income before income taxes |
(365.8 | ) | 76.7 | (442.4 | ) | (100.0 | %)* | (100.0 | %)* | |||||||||||
(Benefit from) provision for income taxes |
(114.4 | ) | 9.8 | (124.2 | ) | (100.0 | %)* | (100.0 | %)* | |||||||||||
Net (loss) income |
$ | (251.4 | ) | $ | 66.9 | $ | (318.3 | ) | (100.0 | %)* | (100.0 | %)* | ||||||||
Weighted average diluted shares outstanding |
70.3 | 70.7 | (0.4 | ) | (0.6 | %) | (0.6 | %) | ||||||||||||
Diluted (net loss) earnings per share |
$ | (3.58 | ) | $ | 0.95 | $ | (4.52 | ) | (100.0 | %)* | (100.0 | %)* | ||||||||
(in millions except percentages) |
Gross Profit |
Gross Profit Margin |
Operating (Loss) Income |
Operating (Loss) Income Margin |
||||||||||||
Fiscal 2022 |
$ | 622.4 | 59.8 |
% |
$ | (283.0 | ) | (27.2 |
%) |
|||||||
Adjustments to reported amounts (1)
|
||||||||||||||||
Franchise rights acquired and goodwill impairments |
— | 396.7 | ||||||||||||||
2023 plan restructuring charges |
1.8 | 13.6 | ||||||||||||||
2022 plan restructuring charges |
6.5 | 27.2 | ||||||||||||||
2021 plan restructuring charges |
(0.6 | ) | (0.3 | ) | ||||||||||||
2020 plan restructuring charges |
(0.7 | ) | (0.7 | ) | ||||||||||||
Total adjustments (1)
|
7.0 | 436.4 | ||||||||||||||
Fiscal 2022, as adjusted (1)
|
$ | 629.4 | 60.5 |
% |
$ | 153.5 | 14.7 |
% |
||||||||
(1) | The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of operations for fiscal 2022 to exclude the impact of the $396.7 million ($301.3 million after tax) of franchise rights acquired and goodwill impairments and the net impact of the $13.6 million ($10.2 million after tax) of 2023 plan restructuring charges, the $27.2 million ($20.4 million after tax) of 2022 plan restructuring charges, the reversal of $0.3 million ($0.3 million after tax) of 2021 plan restructuring charges and the reversal of $0.7 million ($0.5 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures. |
(in millions except percentages) |
Gross Profit |
Gross Profit Margin |
Operating Income |
Operating Income Margin |
||||||||||||
Fiscal 2021 |
$ | 726.4 | 59.9 |
% |
$ | 196.3 | 16.2 |
% |
||||||||
Adjustments to reported amounts (1)
|
||||||||||||||||
2021 plan restructuring charges |
16.7 | 21.5 | ||||||||||||||
2020 plan restructuring charges |
(1.3 | ) | (1.6 | ) | ||||||||||||
Total adjustments (1)
|
15.4 | 19.9 | ||||||||||||||
Fiscal 2021, as adjusted (1)
|
$ | 741.8 | 61.2 |
% |
$ | 216.2 | 17.8 |
% |
||||||||
(1) | The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of operations for fiscal 2021 to exclude the net impact of the $21.5 million ($16.1 million after tax) of 2021 plan restructuring charges and the reversal of $1.6 million ($1.2 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures. |
(in millions except percentages and as noted) |
||||||||||||||||||||||||||||||||||||
Fiscal 2022 |
||||||||||||||||||||||||||||||||||||
GAAP |
Constant Currency |
|||||||||||||||||||||||||||||||||||
Subscription Revenues |
Product Sales & Other |
Total Revenues |
Subscription Revenues |
Product Sales & Other |
Total Revenues |
Total Paid Weeks |
Incoming Subscribers |
EOP Subscribers |
||||||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||||||||||||||
North America |
$ | 640.3 | $ | 88.1 | $ | 728.4 | $ | 641.7 | $ | 88.3 | $ | 730.0 | 141.4 | 2,734.9 | 2,337.0 | |||||||||||||||||||||
International |
278.8 | 33.7 | 312.5 | 312.0 | 37.5 | 349.5 | 74.3 | 1,433.7 | 1,209.2 | |||||||||||||||||||||||||||
Total |
$ | 919.1 | $ | 121.8 | $ | 1,040.9 | $ | 953.7 | $ | 125.8 | $ | 1,079.5 | 215.7 | 4,168.6 | 3,546.1 | |||||||||||||||||||||
% Change Fiscal 2022 vs. Fiscal 2021 |
||||||||||||||||||||||||||||||||||||
North America |
(10.4 | %) | (13.8 | %) | (10.8 | %) | (10.2 | %) | (13.6 | %) | (10.6 | %) | (10.0 | %) | (3.1 | %) | (14.6 | %) | ||||||||||||||||||
International |
(20.1 | %) | (28.7 | %) | (21.1 | %) | (10.6 | %) | (20.5 | %) | (11.8 | %) | (14.0 | %) | (10.4 | %) | (15.7 | %) | ||||||||||||||||||
Total |
(13.5 | %) | (18.5 | %) | (14.2 | %) | (10.3 | %) | (15.8 | %) | (11.0 | %) | (11.4 | %) | (5.8 | %) | (14.9 | %) |
(in millions except percentages and as noted) |
||||||||||||||||||||||||||||||||||||||||
Fiscal 2022 |
||||||||||||||||||||||||||||||||||||||||
Digital Subscription Revenues |
Workshops + Digital Fees |
|||||||||||||||||||||||||||||||||||||||
GAAP |
Constant Currency |
Digital Paid Weeks |
Incoming Digital Subscribers |
EOP Digital Subscribers |
GAAP |
Constant Currency |
Workshops + Digital Paid Weeks |
Incoming Workshops + Digital Subscribers |
EOP Workshops + Digital Subscribers |
|||||||||||||||||||||||||||||||
(in thousands) |
(in thousands) |
|||||||||||||||||||||||||||||||||||||||
North America |
$ | 436.1 | $ | 437.2 | 111.5 | 2,186.9 | 1,802.5 | $ | 204.1 | $ | 204.5 | 29.9 | 548.0 | 534.5 | ||||||||||||||||||||||||||
International |
226.5 | 253.6 | 64.4 | 1,254.2 | 1,033.1 | 52.3 | 58.4 | 10.0 | 179.4 | 176.0 | ||||||||||||||||||||||||||||||
Total |
$ | 662.7 | $ | 690.8 | 175.8 | 3,441.1 | 2,835.6 | $ | 256.4 | $ | 262.8 | 39.9 | 727.4 | 710.5 | ||||||||||||||||||||||||||
% Change Fiscal 2022 vs. Fiscal 2021 |
||||||||||||||||||||||||||||||||||||||||
North America |
(13.5 | %) | (13.3 | %) | (13.1 | %) | (6.3 | %) | (17.6 | %) | (2.8 | %) | (2.7 | %) | 4.3 | % | 12.3 | % | (2.5 | %) | ||||||||||||||||||||
International |
(20.2 | %) | (10.7 | %) | (15.1 | %) | (8.4 | %) | (17.6 | %) | (19.3 | %) | (9.9 | %) | (6.2 | %) | (22.6 | %) | (1.9 | %) | ||||||||||||||||||||
Total |
(15.9 | %) | (12.4 | %) | (13.9 | %) | (7.1 | %) | (17.6 | %) | (6.7 | %) | (4.4 | %) | 1.4 | % | 1.0 | % | (2.3 | %) |
(in millions except percentages and as noted) |
||||||||||||||||||||||||||||||||||||
Fiscal 2021 |
||||||||||||||||||||||||||||||||||||
GAAP |
Constant Currency |
|||||||||||||||||||||||||||||||||||
Subscription Revenues |
Product Sales & Other |
Total Revenues |
Subscription Revenues |
Product Sales & Other |
Total Revenues |
Total Paid Weeks |
Incoming Subscribers |
EOP Subscribers |
||||||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||||||||||||||
North America |
$ | 714.2 | $ | 102.2 | $ | 816.4 | $ | 711.1 | $ | 101.6 | $ | 812.8 | 157.0 | 2,822.3 | 2,734.9 | |||||||||||||||||||||
International |
348.8 | 47.2 | 396.0 | 332.0 | 44.5 | 376.5 | 86.4 | 1,600.8 | 1,433.7 | |||||||||||||||||||||||||||
Total |
$ | 1,063.0 | $ | 149.4 | $ | 1,212.5 | $ | 1,043.1 | $ | 146.2 | $ | 1,189.2 | 243.4 | 4,423.0 | 4,168.6 | |||||||||||||||||||||
% Change Fiscal 2021 vs. Fiscal 2020 |
||||||||||||||||||||||||||||||||||||
North America |
(12.3 | %) | (22.6 | %) | (13.7 | %) | (12.7 | %) | (23.0 | %) | (14.1 | %) | (4.2 | %) | 3.7 | % | (3.1 | %) | ||||||||||||||||||
International |
(6.3 | %) | (20.9 | %) | (8.3 | %) | (10.8 | %) | (25.4 | %) | (12.8 | %) | (4.3 | %) | 5.1 | % | (10.4 | %) | ||||||||||||||||||
Total |
(10.4 | %) | (22.0 | %) | (12.0 | %) | (12.1 | %) | (23.7 | %) | (13.7 | %) | (4.3 | %) | 4.2 | % | (5.8 | %) |
(in millions except percentages and as noted) |
||||||||||||||||||||||||||||||||||||||||
Fiscal 2021 |
||||||||||||||||||||||||||||||||||||||||
Digital Subscription Revenues |
Workshops + Digital Fees |
|||||||||||||||||||||||||||||||||||||||
GAAP |
Constant Currency |
Digital Paid Weeks |
Incoming Digital Subscribers |
EOP Digital Subscribers |
GAAP |
Constant Currency |
Workshops + Digital Paid Weeks |
Incoming Workshops + Digital Subscribers |
EOP Workshops + Digital Subscribers |
|||||||||||||||||||||||||||||||
(in thousands) |
(in thousands) |
|||||||||||||||||||||||||||||||||||||||
North America |
$ | 504.2 | $ | 501.7 | 128.3 | 2,334.1 | 2,186.9 | $ | 210.1 | $ | 209.4 | 28.7 | 488.2 | 548.0 | ||||||||||||||||||||||||||
International |
284.0 | 270.7 | 75.8 | 1,368.9 | 1,254.2 | 64.8 | 61.3 | 10.6 | 231.8 | 179.4 | ||||||||||||||||||||||||||||||
Total |
$ | 788.2 | $ | 772.4 | 204.1 | 3,703.0 | 3,441.1 | $ | 274.9 | $ | 270.7 | 39.3 | 720.0 | 727.4 | ||||||||||||||||||||||||||
% Change Fiscal 2021 vs. Fiscal 2020 |
||||||||||||||||||||||||||||||||||||||||
North America |
4.1 | % | 3.6 | % | 3.0 | % | 24.8 | % | (6.3 | %) | (36.3 | %) | (36.5 | %) | (27.1 | %) | (42.7 | %) | 12.3 | % | ||||||||||||||||||||
International |
9.8 | % | 4.7 | % | 5.8 | % | 22.8 | % | (8.4 | %) | (42.9 | %) | (46.0 | %) | (43.1 | %) | (43.3 | %) | (22.6 | %) | ||||||||||||||||||||
Total |
6.1 | % | 3.9 | % | 4.0 | % | 24.0 | % | (7.1 | %) | (38.0 | %) | (39.0 | %) | (32.3 | %) | (42.9 | %) | 1.0 | % |
December 31, 2022 |
January 1, 2022 |
Increase/ (Decrease) |
||||||||||
(in millions) |
||||||||||||
Total current assets |
$ | 281.3 | $ | 271.2 | $ | 10.2 | ||||||
Total current liabilities |
196.6 | 229.1 | (32.6 | ) | ||||||||
Working capital surplus |
84.8 | 42.0 | (42.7 | ) | ||||||||
Cash and cash equivalents |
178.3 | 153.8 | 24.5 | |||||||||
Working capital deficit, excluding cash and cash equivalents |
$ | (93.6 | ) | $ | (111.8 | ) | $ | (18.2 | ) | |||
December 31, 2022 |
January 1, 2022 |
Increase/ (Decrease) |
Impact to Working Capital Deficit |
|||||||||||||
(in millions) |
||||||||||||||||
Derivative (receivable) payable, net |
$ | (11.7 | ) | $ | 14.7 | $ | (26.4 | ) | $ | (26.4 | ) | |||||
Deferred revenue |
$ | 32.2 | $ | 45.9 | $ | (13.7 | ) | $ | (13.7 | ) | ||||||
Portion of operating lease liabilities due within one year |
$ | 18.0 | $ | 20.3 | $ | (2.3 | ) | $ | (2.3 | ) | ||||||
Income taxes payable |
$ | 1.6 | $ | 1.7 | $ | (0.1 | ) | $ | (0.1 | ) | ||||||
Accrued interest |
$ | 5.3 | $ | 5.1 | $ | 0.2 | $ | 0.2 | ||||||||
Prepaid income taxes |
$ | 19.4 | $ | 30.5 | $ | (11.0 | ) | $ | 11.0 | |||||||
Operational liabilities and other, net of assets |
$ | 67.8 | $ | 54.7 | $ | 13.1 | $ | 13.1 | ||||||||
Working capital deficit change, excluding cash and cash equivalents |
$ | (18.2 | ) | |||||||||||||
December 31, 2022 |
January 1, 2022 |
|||||||
(in millions) |
||||||||
Net cash provided by operating activities |
$ | 76.6 | $ | 157.3 | ||||
Net cash used for investing activities |
$ | (42.6 | ) | $ | (52.8 | ) | ||
Net cash used for financing activities |
$ | (4.7 | ) | $ | (111.5 | ) |
December 31, 2022 |
||||
Term Loan Facility due April 13, 2028 |
$ | 945.0 | ||
Senior Secured Notes due April 15, 2029 |
500.0 | |||
Total |
1,445.0 | |||
Less: Current portion |
— | |||
Unamortized deferred financing costs |
10.7 | |||
Unamortized debt discount |
12.1 | |||
Total long-term debt |
$ | 1,422.3 | ||
• | a pledge of 100% of the equity interests directly held by the Company and each guarantor in any wholly-owned material subsidiary of the Company or any guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such first-tier non-U.S. subsidiary), subject to certain exceptions; and |
• | a security interest in substantially all other tangible and intangible assets of the Company and each guarantor, subject to certain exceptions. |
• | 50% (which percentage will be reduced to 25% and 0% if the Company attains certain first lien secured net leverage ratios) of the Company’s annual excess cash flow; |
• | 100% of the net cash proceeds of certain non-ordinary course asset sales by the Company and its restricted subsidiaries (including casualty and condemnation events, subject to de minimis thresholds), and subject to the right to reinvest 100% of such proceeds, subject to certain qualifications; and |
• | 100% of the net proceeds of any issuance or incurrence of debt by the Company or any of its restricted subsidiaries, other than certain debt permitted under the Credit Agreement. |
(in millions) |
||||||||
December 31, 2022 |
January 1, 2022 |
|||||||
Net (loss) income |
$ | (251.4 | ) | $ | 66.9 | |||
Interest |
81.1 | 87.9 | ||||||
Taxes |
(114.4 | ) | 9.8 | |||||
Depreciation and amortization |
42.3 | 45.5 | ||||||
Stock-based compensation |
13.0 | 21.3 | ||||||
EBITDAS |
$ | (229.3 | ) | $ | 231.4 | |||
Franchise rights acquired and goodwill impairments |
396.7 | — | ||||||
2023 plan restructuring charges |
13.6 | — | ||||||
2022 plan restructuring charges |
27.2 | — | ||||||
2021 plan restructuring charges |
(0.3 | ) | 21.5 | |||||
2020 plan restructuring charges |
(0.7 | ) | (1.6 | ) | ||||
Early extinguishment of debt |
— | 30.4 | ||||||
Adjusted EBITDAS (1)
|
$ | 207.1 | $ | 281.7 | ||||
(1) | The “Adjusted EBITDAS” measure is a non-GAAP financial measure that (i) adjusts the consolidated statements of operations for fiscal 2022 to exclude the impact of the $396.7 million of franchise rights acquired and goodwill impairments and the net impact of the $13.6 million of 2023 plan restructuring charges, the $27.2 million of 2022 plan restructuring charges, the reversal of $0.3 million of 2021 plan restructuring charges and the reversal of $0.7 million of 2020 plan restructuring charges; and (ii) adjusts the consolidated statements of operations for fiscal 2021 to exclude the net impact of the $21.5 million of 2021 plan restructuring charges and the reversal of $1.6 million of 2020 plan restructuring charges and the impact of the $30.4 million early extinguishment of debt. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures. |
(in millions) |
||||
December 31, 2022 |
||||
Total debt |
$ | 1,445.0 | ||
Less: Unamortized deferred financing costs |
10.7 | |||
Less: Unamortized debt discount |
12.1 | |||
Less: Cash on hand |
178.3 | |||
Net debt |
$ | 1,244.0 | ||
Payment Due by Period |
||||||||||||||||||||
Total |
Less than 1 Year |
1-3 Years |
3-5 Years |
More than 5 Years |
||||||||||||||||
(in millions) |
||||||||||||||||||||
Long-Term Debt (1)
|
||||||||||||||||||||
Principal |
$ | 1,445.0 | $ | — | $ | — | $ | 10.0 | $ | 1,435.0 | ||||||||||
Interest |
533.8 | 88.3 | 194.5 | 195.9 | 55.1 | |||||||||||||||
Operating leases, finance leases and non-cancelable agreements |
147.9 | 44.1 | 48.5 | 19.2 | 36.1 | |||||||||||||||
Total (2)
|
$ | 2,126.7 | $ | 132.4 | $ | 243.0 | $ | 225.1 | $ | 1,526.2 | ||||||||||
(1) | Due to the fact that a portion of our debt is variable rate based, we have assumed for purposes of this table that the interest rate on all of our debt as of the end of fiscal 2022 remains constant for all periods presented. |
(2) | The provision for income tax contingencies included in other long-term liabilities on the consolidated balance sheet is not included in the table above due to the fact that the Company is unable to estimate the timing of payment for this liability. |
Pages |
||||
F-2 |
||||
F-5 |
||||
F-6 |
||||
F-7 |
||||
F-8 |
||||
F-9 |
||||
F-10 |
||||
S-1 |
December 31, 2022 |
January 1, 2022 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 178,326 | $ | 153,794 | ||||
Receivables (net of allowances: December 31, 2022-$976 and January 1, 2022-$1,726) |
24,273 | 29,321 | ||||||
Inventories |
20,528 | 30,566 | ||||||
Prepaid income taxes |
19,447 | 30,478 | ||||||
Prepaid expenses and other current assets |
38,757 | 27,014 | ||||||
|
|
|
|
|||||
TOTAL CURRENT ASSETS |
281,331 | 271,173 | ||||||
Property and equipment, net |
28,229 | 37,219 | ||||||
Operating lease assets |
75,696 | 89,902 | ||||||
Franchise rights acquired |
386,745 | 785,195 | ||||||
Goodwill |
155,998 | 157,374 | ||||||
Other intangible assets, net |
63,306 | 61,126 | ||||||
Deferred income taxes |
22,246 | 11,259 | ||||||
Other noncurrent assets |
14,879 | 15,686 | ||||||
|
|
|
|
|||||
TOTAL ASSETS |
$ | 1,028,430 | $ | 1,428,934 | ||||
|
|
|
|
|||||
LIABILITIES AND TOTAL DEFICIT |
||||||||
CURRENT LIABILITIES |
||||||||
Portion of operating lease liabilities due within one year |
$ | 17,955 | $ | 20,297 | ||||
Accounts payable |
18,890 | 22,444 | ||||||
Salaries and wages payable |
72,577 | 57,401 | ||||||
Accrued marketing and advertising |
17,927 | 15,904 | ||||||
Accrued interest |
5,289 | 5,085 | ||||||
Other accrued liabilities |
30,118 | 45,728 | ||||||
Derivative payable |
— | 14,670 | ||||||
Income taxes payable |
1,646 | 1,748 | ||||||
Deferred revenue |
32,156 | 45,855 | ||||||
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
196,558 | 229,132 | ||||||
Long-term debt, net |
1,422,284 | 1,418,104 | ||||||
Long-term operating lease liabilities |
68,099 | 78,157 | ||||||
Deferred income taxes |
23,119 | 157,718 | ||||||
Other |
2,185 | 2,227 | ||||||
|
|
|
|
|||||
TOTAL LIABILITIES |
1,712,245 | 1,885,338 | ||||||
Commitments and contingencies (Note 16) |
||||||||
TOTAL DEFICIT |
||||||||
Common stock, $0 par value; 1,000,000 shares authorized; 122,052 shares issued at December 31, 2022 and 122,052 shares issued at January 1, 2022 |
0 | 0 | ||||||
Treasury stock, at cost, 51,496 shares at December 31, 2022 and 51,988 shares at January 1, 2022 |
(3,097,304 | ) | (3,120,149 | ) | ||||
Retained earnings |
2,418,959 | 2,682,349 | ||||||
Accumulated other comprehensive loss |
(5,470 | ) | (18,604 | ) | ||||
|
|
|
|
|||||
TOTAL DEFICIT |
(683,815 | ) | (456,404 | ) | ||||
|
|
|
|
|||||
TOTAL LIABILITIES AND TOTAL DEFICIT |
$ | 1,028,430 | $ | 1,428,934 | ||||
|
|
|
|
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
(52 weeks) |
(52 weeks) |
(53 weeks) |
||||||||||
Subscription revenues, net |
$ | 919,055 | $ | 1,063,039 | $ | 1,186,489 | ||||||
Product sales and other, net |
121,801 | 149,424 | 191,635 | |||||||||
Revenues, net |
1,040,856 | 1,212,463 | 1,378,124 | |||||||||
Cost of subscription revenues |
321,528 | 370,064 | 452,882 | |||||||||
Cost of product sales and other |
96,928 | 116,044 | 147,401 | |||||||||
Cost of revenues |
418,456 | 486,108 | 600,283 | |||||||||
Gross profit |
622,400 | 726,355 | 777,841 | |||||||||
Marketing expenses |
244,783 | 261,457 | 260,727 | |||||||||
Selling, general and administrative expenses |
263,840 | 268,614 | 297,287 | |||||||||
Franchise rights acquired and goodwill impairments |
396,727 | — | 3,665 | |||||||||
Operating (loss) income |
(282,950 | ) | 196,284 | 216,162 | ||||||||
Interest expense |
81,141 | 87,909 | 123,310 | |||||||||
Other expense, net |
1,691 | 1,358 | 349 | |||||||||
Early extinguishment of debt |
— | 30,352 | — | |||||||||
(Loss) income before income taxes |
(365,782 | ) | 76,665 | 92,503 | ||||||||
(Benefit from) provision for income taxes |
(114,379 | ) | 9,773 | 17,462 | ||||||||
Net (loss) income |
(251,403 | ) | 66,892 | 75,041 | ||||||||
Net loss attributable to the noncontrolling interest |
— | — | 38 | |||||||||
Net (loss) income attributable to WW International, Inc. |
$ | (251,403 | ) | $ | 66,892 | $ | 75,079 | |||||
(Net loss) earnings per share attributable to WW International, Inc. |
||||||||||||
Basic |
$ | (3.58 | ) | $ | 0.96 | $ | 1.11 | |||||
Diluted |
$ | (3.58 | ) | $ | 0.95 | $ | 1.07 | |||||
Weighted average common shares outstanding |
||||||||||||
Basic |
70,321 | 69,640 | 67,849 | |||||||||
Diluted |
70,321 | 70,744 | 70,020 | |||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
(52 weeks) |
(52 weeks) |
(53 weeks) |
||||||||||
Net (loss) income |
$ | (251,403 | ) | $ | 66,892 | $ | 75,041 | |||||
Other comprehensive gain: |
||||||||||||
Foreign currency translation (loss) gain |
(11,222 | ) | (4,797 | ) | 10,088 | |||||||
Income tax benefit (expense) on foreign currency translation (loss) gain |
2,790 | 1,206 | (2,533 | ) | ||||||||
Foreign currency translation (loss) gain, net of taxes |
(8,432 | ) | (3,591 | ) | 7,555 | |||||||
Gain (loss) on derivatives |
28,768 | 13,539 | (7,305 | ) | ||||||||
Income tax (expense) benefit on gain (loss) on derivatives |
(7,202 | ) | (3,403 | ) | 1,855 | |||||||
Gain (loss) on derivatives, net of taxes |
21,566 | 10,136 | (5,450 | ) | ||||||||
Total other comprehensive gain |
13,134 | 6,545 | 2,105 | |||||||||
Comprehensive (loss) income |
(238,269 | ) | 73,437 | 77,146 | ||||||||
Net loss attributable to the noncontrolling interest |
— | — | 38 | |||||||||
Foreign currency translation loss, net of taxes attributable to the noncontrolling interest |
— | — | 98 | |||||||||
Comprehensive loss attributable to the noncontrolling interest |
— | — | 136 | |||||||||
Comprehensive (loss) income attributable to WW International, Inc. |
$ | (238,269 | ) | $ | 73,437 | $ | 77,282 | |||||
WW International, Inc. |
||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interest |
Common Stock |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Balance at December 28, 2019 |
$ | 3,722 | 120,352 | $ | 0 | 52,933 | $ | (3,158,274 | ) | $ | (27,352 | ) | $ | 2,500,083 | $ | (685,543 | ) | |||||||||||||||
Comprehensive income (loss) |
(136 | ) | 2,203 | 75,079 | 77,282 | |||||||||||||||||||||||||||
Issuance of treasury stock under stock plans |
(436 | ) | 17,371 | (23,181 | ) | (5,810 | ) | |||||||||||||||||||||||||
Compensation expense on share-based awards |
55,013 | 55,013 | ||||||||||||||||||||||||||||||
Issuance of common stock |
1,118 | 7,793 | 7,793 | |||||||||||||||||||||||||||||
Acquisition of minority interest |
(3,586 | ) | 3,054 | 3,054 | ||||||||||||||||||||||||||||
Balance at January 2, 2021 |
$ | — | 121,470 | $ | 0 | 52,497 | $ | (3,140,903 | ) | $ | (25,149 | ) | $ | 2,617,841 | $ | (548,211 | ) | |||||||||||||||
Comprehensive income |
— | 6,545 | 66,892 | 73,437 | ||||||||||||||||||||||||||||
Issuance of treasury stock under stock plans |
(509 | ) | 20,754 | (27,783 | ) | (7,029 | ) | |||||||||||||||||||||||||
Compensation expense on share-based awards |
21,348 | 21,348 | ||||||||||||||||||||||||||||||
Issuance of common stock |
582 | 4,051 | 4,051 | |||||||||||||||||||||||||||||
Balance at January 1, 2022 |
$ | — | 122,052 | $ | 0 | 51,988 | $ | (3,120,149 | ) | $ | (18,604 | ) | $ | 2,682,349 | $ | (456,404 | ) | |||||||||||||||
Comprehensive (loss) income |
— | 13,134 | (251,403 | ) | (238,269 | ) | ||||||||||||||||||||||||||
Issuance of treasury stock under stock plans |
(492 | ) | 22,845 | (24,944 | ) | (2,099 | ) | |||||||||||||||||||||||||
Compensation expense on share-based awards |
12,957 | 12,957 | ||||||||||||||||||||||||||||||
Balance at December 31, 2022 |
$ | — | 122,052 | $ | 0 | 51,496 | $ | (3,097,304 | ) | $ | (5,470 | ) | $ | 2,418,959 | $ | (683,815 | ) | |||||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
(52 weeks) |
(52 weeks) |
(53 weeks) |
||||||||||
Operating activities: |
||||||||||||
Net (loss) income |
$ | (251,403 | ) | $ | 66,892 | $ | 75,041 | |||||
Adjustments to reconcile net (loss) income to cash provided by operating activities: |
||||||||||||
Depreciation and amortization |
43,801 | 48,550 | 50,677 | |||||||||
Amortization of deferred financing costs and debt discount |
5,018 | 6,136 | 8,845 | |||||||||
Impairment of franchise rights acquired and goodwill |
396,727 | — | 3,665 | |||||||||
Impairment of intangible and long-lived assets |
3,455 | 521 | 1,372 | |||||||||
Share-based compensation expense |
12,957 | 21,348 | 55,013 | |||||||||
Deferred tax benefit |
(150,994 | ) | (15,565 | ) | (1,440 | ) | ||||||
Allowance for doubtful accounts |
(460 | ) | (214 | ) | 411 | |||||||
Reserve for inventory obsolescence |
6,796 | 7,657 | 16,425 | |||||||||
Foreign currency exchange rate loss |
2,374 | 744 | 719 | |||||||||
Early extinguishment of debt |
— | 30,352 | — | |||||||||
Changes in cash due to: |
||||||||||||
Receivables |
(7,558 | ) | 4,707 | (3,600 | ) | |||||||
Inventories |
3,733 | 1,816 | (25,940 | ) | ||||||||
Prepaid expenses |
9,599 | 1,554 | (5,081 | ) | ||||||||
Accounts payable |
(2,691 | ) | 373 | (4,045 | ) | |||||||
Accrued liabilities |
19,904 | 1,272 | (29,421 | ) | ||||||||
Deferred revenue |
(11,733 | ) | (3,886 | ) | (11,583 | ) | ||||||
Other long term assets and liabilities, net |
(2,291 | ) | (7,962 | ) | 1,859 | |||||||
Income taxes |
(588 | ) | (7,014 | ) | 3,023 | |||||||
Cash provided by operating activities |
76,646 | 157,281 | 135,940 | |||||||||
Investing activities: |
||||||||||||
Capital expenditures |
(2,065 | ) | (2,446 | ) | (21,490 | ) | ||||||
Capitalized software expenditures |
(36,187 | ) | (35,205 | ) | (28,941 | ) | ||||||
Cash paid for acquisitions |
(4,350 | ) | (12,836 | ) | (10,037 | ) | ||||||
Other items, net |
(42 | ) | (2,266 | ) | (5,123 | ) | ||||||
Cash used for investing activities |
(42,644 | ) | (52,753 | ) | (65,591 | ) | ||||||
Financing activities: |
||||||||||||
Net (payments) borrowings on revolver |
— | — | — | |||||||||
Proceeds from long term debt |
— | 1,500,000 | — | |||||||||
Financing costs and debt discount |
— | (37,910 | ) | (475 | ) | |||||||
Payments on long-term debt |
— | (1,564,000 | ) | (96,250 | ) | |||||||
Taxes paid related to net share settlement of equity awards |
(2,197 | ) | (7,494 | ) | (6,798 | ) | ||||||
Proceeds from stock options exercised |
— | 4,469 | 8,176 | |||||||||
Cash paid for acquisitions |
(2,413 | ) | (6,450 | ) | — | |||||||
Other items, net |
(112 | ) | (151 | ) | (192 | ) | ||||||
Cash used for financing activities |
(4,722 | ) | (111,536 | ) | (95,539 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents |
(4,748 | ) | (5,085 | ) | 8,341 | |||||||
Net increase (decrease) in cash and cash equivalents |
24,532 | (12,093 | ) | (16,849 | ) | |||||||
Cash and cash equivalents, beginning of period |
153,794 | 165,887 | 182,736 | |||||||||
Cash and cash equivalents, end of period |
$ | 178,326 | $ | 153,794 | $ | 165,887 | ||||||
1. |
Basis of Presentation |
2. |
Summary of Significant Accounting Policies |
3. |
Accounting Standards Adopted in Current Year |
4. |
Leases |
December 31, 2022 |
January 1, 2022 |
|||||||
Assets: |
||||||||
Operating lease assets |
$ | 75,696 | $ | 89,902 | ||||
Finance lease assets |
54 | 127 | ||||||
Total leased assets |
$ | 75,750 | $ | 90,029 | ||||
Liabilities: |
||||||||
Current |
||||||||
Operating |
$ | 17,955 | $ | 20,297 | ||||
Finance |
31 | 75 | ||||||
Noncurrent |
||||||||
Operating |
68,099 | 78,157 | ||||||
Finance |
7 | 29 | ||||||
Total lease liabilities |
$ | 86,092 | $ | 98,558 | ||||
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Operating lease cost: |
||||||||||||
Fixed lease cost |
$ | 33,227 | $ | 37,688 | $ | 48,674 | ||||||
Lease termination cost |
2,726 | 8,542 | 6,109 | |||||||||
Variable lease cost |
27 | 21 | (30 | ) | ||||||||
Total operating lease cost |
$ | 35,980 | $ | 46,251 | $ | 54,753 | ||||||
Finance lease cost: |
||||||||||||
Amortization of leased assets |
$ | 112 | $ | 151 | $ | 192 | ||||||
Interest on lease liabilities |
6 | 8 | 12 | |||||||||
Total finance lease cost |
$ | 118 | $ | 159 | $ | 204 | ||||||
Total lease cost |
$ | 36,098 | $ | 46,410 | $ | 54,957 | ||||||
December 31, 2022 |
January 1, 2022 |
|||||||
Weighted Average Remaining Lease Term (years) |
||||||||
Operating leases |
6.90 | 7.29 | ||||||
Finance leases |
1.00 | 1.54 | ||||||
Weighted Average Discount Rate |
||||||||
Operating leases |
7.03 | 7.15 | ||||||
Finance leases |
3.52 | 5.31 |
Operating Leases |
Finance Leases |
Total |
||||||||||
Fiscal 2023 |
$ | 23,395 | $ | 32 | $ | 23,427 | ||||||
Fiscal 2024 |
18,869 | 7 | 18,876 | |||||||||
Fiscal 2025 |
13,116 | — | 13,116 | |||||||||
Fiscal 2026 |
9,791 | — | 9,791 | |||||||||
Fiscal 2027 |
9,446 | — | 9,446 | |||||||||
Thereafter |
36,114 | — | 36,114 | |||||||||
Total lease payments |
$ | 110,731 | $ | 39 | $ | 110,770 | ||||||
Less imputed interest |
24,677 | 1 | 24,678 | |||||||||
Present value of lease liabilities |
$ | 86,054 | $ | 38 | $ | 86,092 | ||||||
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||||||
Operating cash flows from operating leases |
$ | 31,580 | $ | 39,747 | $ | 49,043 | ||||||
Operating cash flows from finance leases |
$ | 6 | $ | 8 | $ | 12 | ||||||
Financing cash flows from finance leases |
$ | 112 | $ | 151 | $ | 192 | ||||||
Leased assets obtained in exchange for new operating lease liabilities |
$ | 13,297 | $ | 1,057 | $ | 5,113 | ||||||
Leased assets obtained in exchange for new finance lease liabilities |
$ | 49 | $ | 81 | $ | 132 |
5. |
Revenue |
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Digital Subscription Revenues |
$ | 662,668 | $ | 788,173 | $ | 743,060 | ||||||
Workshops + Digital Fees |
256,387 | 274,866 | 443,429 | |||||||||
Subscription Revenues, net |
$ | 919,055 | $ | 1,063,039 | $ | 1,186,489 | ||||||
Product sales and other, net |
121,801 | 149,424 | 191,635 | |||||||||
Revenues, net |
$ | 1,040,856 | $ | 1,212,463 | $ | 1,378,124 | ||||||
Fiscal Year Ended December 31, 2022 |
||||||||||||
North America |
International |
Total |
||||||||||
Digital Subscription Revenues |
$ | 436,148 | $ | 226,520 | $ | 662,668 | ||||||
Workshops + Digital Fees |
204,115 | 52,272 | 256,387 | |||||||||
Subscription Revenues, net |
$ | 640,263 | $ | 278,792 | $ | 919,055 | ||||||
Product sales and other, net |
88,116 | 33,685 | 121,801 | |||||||||
Revenues, net |
$ | 728,379 | $ | 312,477 | $ | 1,040,856 | ||||||
Fiscal Year Ended January 1, 2022 |
||||||||||||
North America |
International |
Total |
||||||||||
Digital Subscription Revenues |
$ | 504,152 | $ | 284,021 | $ | 788,173 | ||||||
Workshops + Digital Fees |
210,076 | 64,790 | 274,866 | |||||||||
Subscription Revenues, net |
$ | 714,228 | $ | 348,811 | $ | 1,063,039 | ||||||
Product sales and other, net |
102,190 | 47,234 | 149,424 | |||||||||
Revenues, net |
$ | 816,418 | $ | 396,045 | $ | 1,212,463 | ||||||
Fiscal Year Ended January 2, 2021 |
||||||||||||
North America |
International |
Total |
||||||||||
Digital Subscription Revenues |
$ | 484,471 | $ | 258,589 | $ | 743,060 | ||||||
Workshops + Digital Fees |
329,886 | 113,543 | 443,429 | |||||||||
Subscription Revenues, net |
$ | 814,357 | $ | 372,132 | $ | 1,186,489 | ||||||
Product sales and other, net |
131,950 | 59,685 | 191,635 | |||||||||
Revenues, net |
$ | 946,307 | $ | 431,817 | $ | 1,378,124 | ||||||
Deferred Revenue |
Deferred Revenue-Long Term
|
|||||||
Balance as of January 2, 2021 |
$ | 50,475 | $ | 44 | ||||
Net decrease during the period |
(4,620 | ) | (16 | ) | ||||
Balance as of January 1, 2022 |
$ | 45,855 | $ | 28 | ||||
Net (decrease) increase during the period |
(13,699 | ) | 332 | |||||
Balance as of December 31, 2022 |
$ | 32,156 | $ | 360 | ||||
6. |
Acquisitions |
(a) | The Company acquired the entire issued share capital of Denross Limited for a purchase price of $4,500. Payment was in the form of cash paid on December 21, 2021 ($650), cash paid on February 18, 2022 ($3,100) and cash in reserves ($750). The total purchase price was allocated to goodwill ($4,645), deferred tax asset ($496) fully offset by a tax valuation allowance ($496), assumed liabilities ($166), customer relationship value ($14), cash ($4) and other receivables ($3). The goodwill will not be deductible for tax purposes; and |
(b) | The Company acquired the entire issued share capital of Checkweight Limited for a purchase price of $1,500. Payment was in the form of cash ($1,250) and cash in reserves ($250). The total purchase price was allocated to goodwill ($1,291), franchise rights acquired ($240), assumed liabilities ($56), customer relationship value ($17), deferred tax asset ($5) fully offset by a tax valuation allowance ($5), cash ($4) and other receivables ($4). The goodwill will not be deductible for tax purposes. |
(a) | The Company acquired substantially all of the assets of The WW Group, Inc., which operated franchises in certain territories in Michigan, for an aggregate purchase price of $17,500. Payment was in the form of cash paid on March 22, 2021 ($8,255), cash paid on July 30, 2021 ($6,450), cash in reserves ($2,300) and assumed net liabilities ($495). The total purchase price was allocated to franchise rights acquired ($16,885), customer relationship value ($408), inventories ($162), property and equipment, net ($41) and other assets ($4); and |
(b) | The Company acquired substantially all of the assets of The WW Group Co., which operated franchises in certain territories in Ontario, Canada, for an aggregate purchase price of $3,114. Payment was in the form of cash ($2,605), cash in reserves ($599) and assumed net assets ($90). The total purchase price was allocated to franchise rights acquired ($3,040), customer relationship value ($42), property and equipment, net ($25), inventories ($6) and other assets ($1). |
7. |
Franchise Rights Acquired, Goodwill and Other Intangible Assets |
North America |
International |
Total |
||||||||||
Balance as of January 2, 2021 |
$ | 145,071 | $ | 10,546 | $ | 155,617 | ||||||
Goodwill acquired during the period |
2,153 | — | 2,153 | |||||||||
Effect of exchange rate changes |
306 | (702 | ) | (396 | ) | |||||||
Balance as of January 1, 2022 |
$ | 147,530 | $ | 9,844 | $ | 157,374 | ||||||
Goodwill acquired during the period |
— | 5,936 | 5,936 | |||||||||
Goodwill impairment |
(1,101 | ) | (2,023 | ) | (3,124 | ) | ||||||
Effect of exchange rate changes |
(2,862 | ) | (1,326 | ) | (4,188 | ) | ||||||
Balance as of December 31, 2022 |
$ | 143,567 | $ | 12,431 | $ | 155,998 | ||||||
Fiscal 2022 |
Fiscal 2021 |
|||
Debt-Free Cumulative Annual Cash Flow Growth Rate |
1.2% to 20.6% | 0.2% to 2.6% | ||
Discount Rate |
9.6% | 8.5% |
December 31, 2022 |
January 1, 2022 |
|||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Gross Carrying Amount |
Accumulated Amortization |
|||||||||||||
Capitalized software costs |
$ | 107,229 | $ | 94,375 | $ | 115,065 | $ | 94,771 | ||||||||
Website development costs |
133,818 | 91,482 | 110,678 | 78,629 | ||||||||||||
Trademarks |
12,162 | 11,882 | 12,116 | 11,677 | ||||||||||||
Other |
13,961 | 6,125 | 14,021 | 5,677 | ||||||||||||
Trademarks and other intangible assets |
$ | 267,170 | $ | 203,864 | $ | 251,880 | $ | 190,754 | ||||||||
Franchise rights acquired |
8,164 | 5,101 | 7,905 | 4,766 | ||||||||||||
Total finite-lived intangible assets |
$ | 275,334 | $ | 208,965 | $ | 259,785 | $ | 195,520 |
Fiscal 2023 |
$ | 29,816 | ||
Fiscal 2024 |
$ | 19,599 | ||
Fiscal 2025 |
$ | 8,189 | ||
Fiscal 2026 |
$ | 871 | ||
Fiscal 2027 |
$ | 723 | ||
Thereafter |
$ | 7,171 |
8. |
Property and Equipment |
December 31, 2022 |
January 1, 2022 |
|||||||
Equipment |
$ | 55,303 | $ | 71,436 | ||||
Leasehold improvements |
66,860 | 72,235 | ||||||
$ | 122,163 | $ | 143,671 | |||||
Less: Accumulated depreciation and amortization |
(93,934 | ) | (106,452 | ) | ||||
$ | 28,229 | $ | 37,219 | |||||
9. |
Long-Term Debt |
December 31, 2022 |
January 1, 2022 |
|||||||||||||||||||||||||||||||
Principal Balance |
Unamortized Deferred Financing Costs |
Unamortized Debt Discount |
Effective Rate (1)
|
Principal Balance |
Unamortized Deferred Financing Costs |
Unamortized Debt Discount |
Effective Rate (1)
|
|||||||||||||||||||||||||
Revolving Credit Facility due April 13, 2026 |
$ | — | $ | — | $ | — | 0.00 | % | $ | — | $ | — | $ | — | 2.61 | % | ||||||||||||||||
Term Loan Facility due April 13, 2028 |
945,000 | 5,821 | 12,064 | 5.85 | % | 945,000 | 6,930 | 14,362 | 4.48 | % | ||||||||||||||||||||||
Senior Secured Notes due April 15, 2029 |
500,000 | 4,831 | — | 4.70 | % | 500,000 | 5,604 | — | 4.70 | % | ||||||||||||||||||||||
Total |
$ | 1,445,000 | $ | 10,652 | $ | 12,064 | 5.45 | % | $ | 1,445,000 | $ | 12,534 | $ | 14,362 | 5.15 | % | ||||||||||||||||
Less: Current portion |
— | — | ||||||||||||||||||||||||||||||
Unamortized deferred financing costs |
10,652 | 12,534 | ||||||||||||||||||||||||||||||
Unamortized debt discount |
12,064 | 14,362 | ||||||||||||||||||||||||||||||
Total long-term debt |
$ | 1,422,284 | $ | 1,418,104 | ||||||||||||||||||||||||||||
(1) |
Includes amortization of deferred financing costs and debt discount. |
• | a pledge of 100% of the equity interests directly held by the Company and each guarantor in any wholly-owned material subsidiary of the Company or any guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such first-tier non-U.S. subsidiary), subject to certain exceptions; and |
• | a security interest in substantially all other tangible and intangible assets of the Company and each guarantor, subject to certain exceptions. |
• | 50% (which percentage will be reduced to 25% and 0% if the Company attains certain first lien secured net leverage ratios) of the Company’s annual excess cash flow; |
• | 100% of the net cash proceeds of certain non-ordinary course asset sales by the Company and its restricted subsidiaries (including casualty and condemnation events, subject to de minimis thresholds), and subject to the right to reinvest 100% of such proceeds, subject to certain qualifications; and |
• | 100% of the net proceeds of any issuance or incurrence of debt by the Company or any of its restricted subsidiaries, other than certain debt permitted under the Credit Agreement. |
Fiscal 2023 |
$ | — | ||
Fiscal 2024 |
— | |||
Fiscal 2025 |
— | |||
Fiscal 2026 |
— | |||
Fiscal 2027 |
10,000 | |||
Thereafter |
1,435,000 | |||
$ | 1,445,000 | |||
10. |
Treasury Stock |
11. |
Per Share Data |
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Numerator: |
||||||||||||
Net (loss) income attributable to WW International, Inc. |
$ | (251,403 | ) | $ | 66,892 | $ | 75,079 | |||||
Denominator: |
||||||||||||
Weighted average shares of common stock outstanding |
70,321 | 69,640 | 67,849 | |||||||||
Effect of dilutive common stock equivalents |
— | 1,104 | 2,171 | |||||||||
Weighted average diluted common shares outstanding |
70,321 | 70,744 | 70,020 | |||||||||
(Net loss) earnings per share attributable to WW International, Inc. |
||||||||||||
Basic |
$ | (3.58 | ) | $ | 0.96 | $ | 1.11 | |||||
Diluted |
$ | (3.58 | ) | $ | 0.95 | $ | 1.07 | |||||
12. |
Stock Plans |
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||
Dividend yield |
0.0% | 0.0% | 0.0% | |||
Volatility |
57.0% - 57.1% |
56.7% | 56.5% - 56.7% |
|||
Risk-free interest rate |
2.36% - 2.86% | 1.13% | 0.45% - 0.52% |
|||
Expected term (years) |
6.0 - 7.0 | 6.5 | 5.9 - 6.5 |
Shares |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Life (Yrs.) |
Aggregate Intrinsic Value |
|||||||||||||
Outstanding at January 1, 2022 |
5,706 | $ | 36.13 | |||||||||||||
Granted |
2,227 | $ | 22.75 | |||||||||||||
Exercised |
— | $ | — | |||||||||||||
Cancelled |
(529 | ) | $ | 20.36 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2022 |
7,404 | $ | 33.23 | 4.0 | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2022 |
5,144 | $ | 37.31 | 2.5 | $ | — | ||||||||||
|
|
|
|
|
,
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
Weighted-Average
Grant-Date Fair Value |
|||||||
Outstanding at January 1, 2022 |
1,595 | $ | 21.99 | |||||
Granted |
2,221 | $ | 6.69 | |||||
Vested |
(655 | ) | $ | 22.25 | ||||
Forfeited |
(750 | ) | $ | 17.90 | ||||
|
|
|||||||
Outstanding at December 31, 2022 |
2,411 | $ | 9.09 | |||||
|
|
Shares |
Weighted-Average
Grant-Date Fair Value |
|||||||
Outstanding at January 1, 2022 |
201 | $ | 18.94 | |||||
Granted |
— | $ | — | |||||
Vested |
— | $ | — | |||||
Forfeited |
(201 | ) | $ | 18.94 | ||||
|
|
|||||||
Outstanding at December 31, 2022 |
— | $ | — | |||||
|
|
13. |
Taxes |
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Domestic |
$ | (375,689 | ) | $ | (27,763 | ) | $ | (10,467 | ) | |||
Foreign |
9,907 | 104,428 | 102,970 | |||||||||
|
|
|
|
|
|
|||||||
$ | (365,782 | ) | $ | 76,665 | $ | 92,503 | ||||||
|
|
|
|
|
|
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Current: |
||||||||||||
U.S. federal |
$ | 13,147 | $ | 38 | $ | (14,052 | ) | |||||
State |
3,446 | 1,055 | 4,421 | |||||||||
Foreign |
20,022 | 24,245 | 28,533 | |||||||||
$ | 36,615 | $ | 25,338 | $ | 18,902 | |||||||
Deferred: |
||||||||||||
U.S. federal |
$ | (114,727 | ) | $ | (8,510 | ) | $ | 94 | ||||
State |
(24,262 | ) | (9,589 | ) | (2,835 | ) | ||||||
Foreign |
(12,005 | ) | 2,534 | 1,301 | ||||||||
$ | (150,994 | ) | $ | (15,565 | ) | $ | (1,440 | ) | ||||
Total tax (benefit) provision |
$ | (114,379 | ) | $ | 9,773 | $ | 17,462 | |||||
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
U.S. federal statutory tax rate |
21.0 | % | 21.0 | % | 21.0 | % | ||||||
State income taxes (net of federal benefit) |
3.8 | % | (1.8 | %) | 1.0 | % | ||||||
Research and development credit |
0.4 | % | (1.8 | %) | (2.2 | %) | ||||||
Tax windfall/shortfall on share-based awards |
(0.5 | %) | (4.6 | %) | (4.3 | %) | ||||||
Reserves for uncertain tax positions |
0.0 | % | 0.2 | % | 0.9 | % | ||||||
Tax rate changes |
0.3 | % | (8.2 | %) | (1.2 | %) | ||||||
Executive compensation limitation |
(0.2 | %) | 1.8 | % | 1.2 | % | ||||||
GILTI |
0.0 | % | 0.0 | % | (8.2 | %) | ||||||
FDII |
1.2 | % | 0.0 | % | (1.5 | %) | ||||||
Change in valuation allowance |
(7.1 | %) | (2.0 | %) | 0.0 | % | ||||||
Out-of-period |
0.6 | % | 0.0 | % | 2.5 | % | ||||||
Impact of foreign operations |
(1.6 | %) | 9.0 | % | 8.7 | % | ||||||
Reversal of certain deferred tax liabilities |
13.2 | % | 0.0 | % | 0.0 | % | ||||||
Other |
0.2 | % | (0.9 | %) | 1.0 | % | ||||||
Total effective tax rate |
31.3 | % | 12.7 | % | 18.9 | % | ||||||
December 31, 2022 |
January 1, 2022 |
|||||||
Interest expense disallowance |
$ | 54,259 | $ | 44,598 | ||||
Operating lease liabilities |
20,842 | 22,901 | ||||||
Operating loss carryforwards |
10,102 | 14,172 | ||||||
Provision for estimated expenses |
2,734 | 2,128 | ||||||
Salaries and wages |
10,280 | 2,710 | ||||||
Share-based compensation |
15,190 | 15,707 | ||||||
Other comprehensive income |
1,841 | 6,306 | ||||||
Other |
3,695 | 5,927 | ||||||
Less: valuation allowance |
(35,818 | ) | (10,083 | ) | ||||
Total deferred tax assets |
$ | 83,125 | $ | 104,366 | ||||
Goodwill and intangible assets |
$ | (51,841 | ) | $ | (224,548 | ) | ||
Operating lease assets |
(18,228 | ) | (20,794 | ) | ||||
Depreciation |
(13,498 | ) | (4,044 | ) | ||||
Prepaid expenses |
(431 | ) | (1,433 | ) | ||||
Total deferred tax liabilities |
$ | (83,998 | ) | $ | (250,819 | ) | ||
Net deferred tax liabilities |
$ | (873 | ) | $ | (146,453 | ) | ||
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Balance at beginning of year |
$ | 1,055 | $ | 851 | $ | 206 | ||||||
Increases related to tax positions taken in current year |
145 | 196 | — | |||||||||
Increases related to tax positions taken in prior years |
8 | 260 | 605 | |||||||||
Reductions related to tax positions taken in prior years |
(95 | ) | (199 | ) | — | |||||||
Reductions related to settlements with tax authorities |
(273 | ) | — | — | ||||||||
Reductions related to lapse of statutes of limitations |
(206 | ) | — | — | ||||||||
Effects of foreign currency translation |
(23 | ) | (53 | ) | 40 | |||||||
Balance at end of year |
$ | 611 | $ | 1,055 | $ | 851 | ||||||
14. |
Employee Benefit Plans |
15. |
Cash Flow Information |
Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Net cash paid during the year for: |
||||||||||||
Interest expense |
$ | 76,216 | $ | 79,374 | $ | 137,163 | ||||||
Income taxes (1)
|
$ | 25,815 | $ | 41,377 | $ | 24,609 | ||||||
Noncash investing and financing activities were as follows: |
||||||||||||
Fair value of net assets acquired in connection with acquisitions |
$ | 240 | $ | 20,032 | $ | 9,677 | ||||||
Capital expenditures and capitalized software included in accounts payable and accrued expenses |
$ | 1,466 | $ | 1,835 | $ | 3,497 |
(1) Fiscal 2022, fiscal 2021 and fiscal 2020 include tax refunds received of
$
5,109
, $
1,077
and $
6,936 , respectively. |
16. |
Commitments and Contingencies |
17. |
Segment and Geographic Data |
Total Revenues, net for the Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
North America |
$ | 728,379 | $ | 816,418 | $ | 946,307 | ||||||
International |
312,477 | 396,045 | 431,817 | |||||||||
Total revenues, net |
$ | 1,040,856 | $ | 1,212,463 | $ | 1,378,124 | ||||||
Net (Loss) Income for the Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
Segment operating (loss) income: |
||||||||||||
North America |
$ | (218,997 | ) | $ | 218,257 | $ | 271,123 | |||||
International |
83,330 | 130,622 | 136,337 | |||||||||
Total segment operating (loss) income |
$ | (135,667 | ) | $ | 348,879 | $ | 407,460 | |||||
General corporate expenses |
147,283 | 152,595 | 191,298 | |||||||||
Interest expense |
81,141 | 87,909 | 123,310 | |||||||||
Other expense, net |
1,691 | 1,358 | 349 | |||||||||
Early extinguishment of debt |
— | 30,352 | — | |||||||||
(Benefit from) provision for income taxes |
(114,379 | ) | 9,773 | 17,462 | ||||||||
Net (loss) income |
$ | (251,403 | ) | $ | 66,892 | $ | 75,041 | |||||
Net loss attributable to the noncontrolling interest |
— | — | 38 | |||||||||
Net (loss) income attributable to WW International, Inc. |
$ | (251,403 | ) | $ | 66,892 | $ | 75,079 | |||||
Depreciation and Amortization for the Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
North America |
$ | 32,521 | $ | 39,270 | $ | 39,740 | ||||||
International |
1,660 | 2,671 | 3,002 | |||||||||
Total segment depreciation and amortization |
$ | 34,181 | $ | 41,941 | $ | 42,742 | ||||||
General corporate depreciation and amortization |
14,638 | 12,745 | 16,780 | |||||||||
Depreciation and amortization |
$ | 48,819 | $ | 54,686 | $ | 59,522 | ||||||
Total Revenues, net for the Fiscal Year Ended |
||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||
United States |
$ | 683,449 | $ | 761,358 | $ | 885,152 | ||||||
Canada |
44,930 | 55,060 | 61,155 | |||||||||
Continental Europe |
239,129 | 297,910 | 313,380 | |||||||||
United Kingdom |
47,995 | 65,820 | 84,387 | |||||||||
Other |
25,353 | 32,315 | 34,050 | |||||||||
$ | 1,040,856 | $ | 1,212,463 | $ | 1,378,124 | |||||||
Long-Lived Assets (1)
|
||||||||
December 31, 2022 |
January 1, 2022 |
|||||||
United States |
$ | 24,417 | $ | 31,566 | ||||
Canada |
2,412 | 3,198 | ||||||
Continental Europe |
907 | 1,111 | ||||||
United Kingdom |
303 | 1,002 | ||||||
Other |
190 | 342 | ||||||
$ | 28,229 | $ | 37,219 | |||||
(1) |
Amounts include finance lease assets |
Operating Lease Assets |
||||||||
December 31, 2022 |
January 1, 2022 |
|||||||
United States |
$ | 68,062 | $ | 80,609 | ||||
Canada |
4,159 | 5,079 | ||||||
Continental Europe |
2,304 | 2,216 | ||||||
United Kingdom |
1,169 | 1,732 | ||||||
Other |
2 | 266 | ||||||
$ | 75,696 | $ | 89,902 | |||||
18. |
Fair Value Measurements |
• | Level 1 — Quoted prices in active markets for identical assets or liabilities. |
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
• | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Fair Value Measurements Using: |
||||||||||||||||
Total Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Interest rate swap current asset at December 31, 2022 |
$ | 11,748 | $ | — | $ | 11,748 | $ | — | ||||||||
Interest rate swap noncurrent asset at December 31, 2022 |
$ | 2,450 | $ | — | $ | 2,450 | $ | — | ||||||||
Interest rate swap current liability at January 1, 2022 |
$ | 14,670 | $ | — | $ | 14,670 | $ | — |
19. |
Derivative Instruments and Hedging |
Fair Value |
||||||||||||
Balance Sheet Classification |
Balance Sheet Location |
December 31, 2022 |
January 1, 2022 |
|||||||||
Assets: |
||||||||||||
Interest rate swaps - current swaps |
Current asset | Prepaid expenses and other current assets | $ | 11,748 | $ | — | ||||||
Interest rate swaps - current swaps |
Noncurrent asset | Other noncurrent assets | 2,450 | — | ||||||||
Total assets |
$ | 14,198 | $ | — | ||||||||
Liabilities: |
||||||||||||
Interest rate swaps - current swaps |
Current liability | Derivative payable | $ | — | $ | 14,670 | ||||||
Total liabilities |
$ | — | $ | 14,670 | ||||||||
20. |
Accumulated Ot h er Comprehensive Loss |
Fiscal Year Ended December 31, 2022 |
||||||||||||
(Loss) Gain
on Qualifying
Hedges
|
Loss on
Foreign
Currency
Translation
|
Total |
||||||||||
Beginning balance at January 1, 2022 |
$ | (10,843 | ) | $ | (7,761 | ) | $ | (18,604 | ) | |||
Other comprehensive income (loss) before reclassifications, net of tax |
19,250 | (8,432 | ) | 10,818 | ||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax (2)
|
2,316 | — | 2,316 | |||||||||
Net current period other comprehensive income (loss) |
$ | 21,566 | $ | (8,432 | ) | $ | 13,134 | |||||
Ending balance at December 31, 2022 |
$ | 10,723 | $ | (16,193 | ) | $ | (5,470 | ) | ||||
(1) Amounts in parentheses indicate debits
(2) See separate table below for details about these reclassifications
|
|
Fiscal Year Ended January 1, 2022 |
||||||||||||
Loss on Qualifying Hedges |
Loss on Foreign Currency Translation |
Total |
||||||||||
Beginning balance at January 2, 2021 |
$ | (20,979 | ) | $ | (4,170 | ) | $ | (25,149 | ) | |||
Other comprehensive income (loss) before reclassifications, net of tax |
2,452 | (3,591 | ) | (1,139 | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax (2)
|
7,684 | — | 7,684 | |||||||||
Net current period other comprehensive income (loss) |
$ | 10,136 | $ | (3,591 | ) | $ | 6,545 | |||||
Ending balance at January 1, 2022 |
$ | (10,843 | ) | $ | (7,761 | ) | $ | (18,604 | ) | |||
(1) Amounts in parentheses indicate debits
(2) See separate table below for details about these reclassifications
|
|
Fiscal Year Ended January 2, 2021 |
||||||||||||
Loss on Qualifying Hedges |
Loss on Foreign Currency Translation |
Total |
||||||||||
Beginning balance at December 28, 2019 |
$ | (15,529 | ) | $ | (11,823 | ) | $ | (27,352 | ) | |||
Other comprehensive (loss) income before reclassifications, net of tax |
(14,590 | ) | 7,555 | (7,035 | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax (2)
|
9,140 | — | 9,140 | |||||||||
Net current period other comprehensive (loss) income including noncontrolling interest |
$ | (5,450 | ) | $ | 7,555 | $ | 2,105 | |||||
Less: Net current period other comprehensive loss attributable to the noncontrolling interest |
— | 98 | 98 | |||||||||
Ending balance at January 2, 2021 |
$ | (20,979 | ) | $ | (4,170 | ) | $ | (25,149 | ) | |||
(1) Amounts in parentheses indicate debits
(2) See separate table below for details about these reclassifications
|
|
Fiscal Year Ended |
||||||||||||||
December 31, 2022 |
January 1, 2022 |
January 2, 2021 |
||||||||||||
Details about Other Comprehensive Loss Components |
Amounts Reclassified from Accumulated Other Comprehensive Loss |
Affected Line Item in the Statement Where Net Income is Presented |
||||||||||||
Loss on Qualifying Hedges |
||||||||||||||
Interest rate contracts |
$ | (3,090 | ) | $ | (10,271 | ) | $ | (12,218 | ) | Interest expense | ||||
(3,090 | ) | (10,271 | ) | (12,218 | ) | (Loss) income before income taxes |
||||||||
774 | 2,587 | 3,078 | (Benefit from) provision for income taxes |
|||||||||||
$ | (2,316 | ) | $ | (7,684 | ) | $ | (9,140 | ) | Net (loss) income | |||||
(1) |
Amounts in parentheses indicate debits to profit/loss |
21. |
Recently Issued Accounting Pronouncements |
22. |
Related Party |
23. |
Restructuring |
Fiscal Year Ended December 31, 2022 |
||||
Employee termination benefit costs |
$ | 13,608 | ||
Total restructuring expenses |
$ | 13,608 | ||
Fiscal Year Ended December 31, 2022 |
||||
Cost of revenues |
$ | 1,798 | ||
Selling, general and administrative expenses |
11,810 | |||
Total restructuring expenses |
$ | 13,608 | ||
Fiscal Year Ended December 31, 2022 |
||||
Lease termination and other related costs |
$ | 3,791 | ||
Employee termination benefit costs |
19,170 | |||
Lease impairments |
2,680 | |||
Other costs |
1,540 | |||
Total restructuring expenses |
$ | 27,181 | ||
Fiscal Year Ended December 31, 2022 |
||||
Cost of revenues |
$ | 6,476 | ||
Selling, general and administrative expenses |
20,705 | |||
Total restructuring expenses |
$ | 27,181 | ||
Fiscal Year Ended January 1, 2022 |
||||
Lease termination and other related costs |
$ | 12,688 | ||
Employee termination benefit costs |
8,846 | |||
Total restructuring expenses |
$ | 21,534 | ||
Fiscal Year Ended January 1, 2022 |
||||
Cost of revenues |
$ | 16,727 | ||
Selling, general and administrative expenses |
4,807 | |||
Total restructuring expenses |
$ | 21,534 | ||
Fiscal Year Ended January 2, 2021 |
||||
Lease termination and other related costs |
$ | 7,989 | ||
Employee termination benefit costs |
25,103 | |||
Total restructuring expenses |
$ | 33,092 | ||
Fiscal Year Ended January 2, 2021 |
||||
Cost of revenues |
$ | 23,300 | ||
Selling, general and administrative expenses |
9,792 | |||
Total restructuring expenses |
$ | 33,092 | ||
24. |
Subsequent Event |
Additions |
||||||||||||||||||||
Balance at Beginning of Period |
Charged to Costs and Expenses |
Charged to Other Accounts |
Deductions (1)
|
Balance at End of Period |
||||||||||||||||
FISCAL YEAR ENDED DECEMBER 31, 2022 |
||||||||||||||||||||
Allowance for credit losses |
$ | 1,726 | $ | (460 | ) | $ | — | $ | (290 | ) | $ | 976 | ||||||||
Inventory and other reserves |
$ | 7,141 | $ | 6,796 | $ | — | $ | (7,469 | ) | $ | 6,468 | |||||||||
Tax valuation allowance |
$ | 10,083 | $ | 27,871 | $ | (143 | ) | $ | (1,993 | ) | $ | 35,818 | ||||||||
FISCAL YEAR ENDED JANUARY 1, 2022 |
||||||||||||||||||||
Allowance for credit losses |
$ | 2,298 | $ | (214 | ) | $ | — | $ | (358 | ) | $ | 1,726 | ||||||||
Inventory and other reserves |
$ | 10,239 | $ | 7,657 | $ | — | $ | (10,755 | ) | $ | 7,141 | |||||||||
Tax valuation allowance |
$ | 7,190 | $ | 1,266 | $ | 4,437 | $ | (2,810 | ) | $ | 10,083 | |||||||||
FISCAL YEAR ENDED JANUARY 2, 2021 |
||||||||||||||||||||
Allowance for credit losses |
$ | 1,813 | $ | 411 | $ | — | $ | 74 | $ | 2,298 | ||||||||||
Inventory and other reserves |
$ | 4,685 | $ | 16,425 | $ | — | $ | (10,871 | ) | $ | 10,239 | |||||||||
Tax valuation allowance |
$ | 6,760 | $ | 792 | $ | 141 | $ | (503 | ) | $ | 7,190 |
(1) |
Primarily represents the utilization of established reserves, net of recoveries, where applicable. |